The minimum dividend increase streak featured by DGRO is not a trait of rival dividend growth ETFs, but the fund’s underlying index does employ other important screens to go along with the increase streak requirement, which can be seen as backward-looking.
For example, the Morningstar US Dividend Growth Index does not include companies with yields that rank in the top 10% of the eligible inclusion universe and only companies with a payout ratio of less than 75% can be included, according to Morningstar. [New Core Dividend Growth Idea]
“DGRO’s ranking is also supported by relatively high S&P Capital IQ Quality Rankings and relatively low S&P Capital IQ Qualitative Risk Assessments. However, more of its holdings are considered undervalued according to S&P Capital IQ than in DVY. DGRO’s short history is not a concern to us since we do not rely on past performance in ranking ETFs,” said S&P Capital IQ.
iShares Core Dividend Growth ETF
Tom Lydon’s clients own shares of DVY.